WASHINGTON – The congressional panel assigned to fashion big cuts in the perilously expanding U.S. deficit was going out of business Monday, having failed to bridge bitter ideological differences separating Republicans and Democrats in the run-up to presidential and legislative elections next year.
Republicans refused to cross their ideological line against increasing taxes. Democrats refused to allow cuts in popular programs that serve the elderly and poor without a compensating growth of government income, especially from the wealthiest Americans.
The close of business Monday marks deadline for constructing a plan to slash $1.2 trillion from federal red ink. The committee was to have had a polished plan ready on Wednesday, with the two-day interval to be used by the Congressional Budget Office to assess the savings projected in any deal.
The deal between President Barack Obama and Congress that set up the so-called supercommittee sought to prevent failure by dictating about $1 trillion in automatic cuts in spending for defence and a range of other government agencies should a deal not be struck.
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Americans already hold Congress in record low esteem, 9 per cent approval, and the supercommittee failure was certain to send that number even lower. But it also could hurt Obama, who has increased the total U.S. debt considerably – to more that $15 trillion – with emergency spending he said was to keep the American economy out of a depression. He pumped billions into the economy after it nearly collapsed in the final months of George W. Bush presidency.
As the committee prepared to announce it was disbanding without reaching a deal, the U.S. stock market fell sharply. Investors are worried about a further downgrade of the U.S. credit rating and subsequent jump in interest rates. One agency that rates American government debt, Standard & Poors, marked U.S. bonds down from triple A to AA+ last summer during the congressional fight over raising the U.S. borrowing limit – normally done as a matter of course. That fight spawned the supercommittee as part of a bitterly fought compromise.
As the committee ended talks on Sunday, the White House was still calling on lawmakers to finish the task they were assigned.
“Avoiding accountability and kicking the can down the road is how Washington got into this deficit problem in the first place, so Congress needs to do its job here and make the kind of tough choices to live within its means that American families make every day,” White House spokeswoman Amy Brundage said.
But failure was in plain view as top Democrats and Republicans flooded Sunday political talk shows to blame the other side for failure.
Co-chairs Sen. Patty Murray, a Democrat, and Rep. Jeb Hensarling, a Republican, now planned on Monday to issue a statement declaring the panel’s work at an end, aides said.
“There is one sticking divide. And that’s the issue of what I call shared sacrifice,” Murray said Sunday on CNN’s “State of the Union” program.
“The wealthiest Americans who earn over a million a year have to share too. And that line in the sand, we haven’t seen Republicans willing to cross yet,” she said.
Republicans said Democrats’ demands on taxes were simply too great and weren’t accompanied by large enough proposals to curb the explosive growth of so-called entitlement programs like the popular Social Security pension system and health care for the elderly and the poor.
The automatic trigger that would now go into effect in 2013 would force about $1 trillion over nine years in automatic across-the-board spending cuts to a wide range of domestic programs and the Pentagon budget, according to the Congressional Budget Office. That action, called a “sequester,” would also generate $169 billion in savings from lower interest costs on the national debt.